Of all the IP lawyers I know who are openly advocating for radical changes in the copyright system, William Patry is the only one who is not afraid to dig deep. Instead of founding his arguments upon novel interpretations of some obscure subparagraphs of legislative provisions or dictas in 18th century case law, Patry starts where any meaningful discussion about copyright should start – with the question why, why do we have copyright laws at all.

While I vehemently disagree with his conclusions and proposals, I have tremendous respect for Mr. Patry because, unlike most of those who agree with the substance of his proposals, he openly declares his goals and reasons, not hiding behind some illusory goal of pleasing everybody. It is an honour to have such an opponent in this philosophical debate.

William Patry has recently published his new book, “How to Fix Copyright”. In it he explains why today’s copyright laws make no sense, goes back to the foundations of copyright and asks the inevitable question why, offers an answer to that question and makes several proposals based on that answer.

Ironically, I tend to agree with most of what Patry wrote in his book. A great deal of it is nothing but brilliant and very useful. In fact, I wholeheartedly recommend it to both supporters of “stronger” copyright laws and destroyers of copyright.

As I mentioned, I disagree with Patry’s answer to the why question and, subsequently, to his proposals with respect to how copyright should be fixed. In this review, I will first briefly outline my fundamental disagreements with Mr. Patry and then illustrate them with examples from his book.

Big problems with Patry’s position

There are several big problems that I see in Patry’s position.

The most important one is that he believes that the reason for existence of copyright laws is to benefit the public the most. I have been saying this for years: copyright laws can only exist for one of two reasons: either they focus on protecting the interests of creators and investors while disregarding the potential consequences for the public; or they focus on protecting the interests of the public while providing to creators and investors the minimal level of protection required to ensure that the public has the most amount of new works to consume.

The idea of balancing these interests is insane, even though it became mainstream. I am well known for comparing it to an attempt to balance the interests of rapists and their victims in a single piece of legislation – it just doesn’t work that way… I will be returning to this metaphor throughout this article. If you feel offended, stop reading.

The reason I respect Patry’s position so much is that he understands that the balance model is nonsensical. The reason I disagree with Patry is that in this resulting dilemma between protecting the public or the creators, he sides with the public.

Patry is in fact advocating for the Soviet model of copyright law where creators had no control over the use of their works and were only entitled to “fair” remuneration. As I wrote in my article, “Copyright and the Great Socialist Degradation”, authors created many great works in the Soviet times. Lack of exclusive right to control the use of one’s works, as Patry rightly notices, does not necessarily cause authors to abstain from creating. The problem with this, of course, is, in the words of Ayn Rand, “the man who produces while others dispose of his product, is a slave”. By taking away from the copyright owners to right to decide on what terms their works are to be used by the public, we are essentially enslaving them.

Secondly, Patry correctly makes a distinction between what the laws are and what the laws should be (in hid opinion). He understands that in order to get to the a destination, one cannot rely on the laws as they are today. He is not afraid to offer suggestions that go beyond attempts to reinterpret the existing norms. Yes, somehow he draws support from old copyright laws, such as Statute of Anne, when it tends to benefit his position.

I have two issues with this approach. You cannot have it both ways. Either we disregard all existing and past laws in the search of the perfect solution, or we are bound by such existing and past laws. Relying on provisions of the 1710 act as the basis for one’s proposals in 2012 is no more genuine than claiming that whatever laws that are in existence today are the way they should remain for the next 300 years. On the other hand, one should not forget that the Statute of Anne was adopted in the pre-Adam Smith era of capitalism, when individual rights and freedoms meant little and when the laws were but a system of privileges granted to groups and individuals. To look to these laws for guidance as to the fundamental principles of today’s copyright is no more genuine than using slavery laws as the inspiration for today’s employment standards.

Thirdly, while Patry correctly states that law is not the solution to business problems, he at the same time advocates that the new laws he suggests will be a good way to force businesses to adopt “good” business models to replace the awful retrograde business models that copyright owners around the world currently use in reliance on the outdated copyright laws. Again, you cannot have it both ways.

You don’t fix broken business models by stealing from those who attempt to run them. Free markets do a much better job at educating those whose business models are antiquated. As I explained in my article “Failed Business Models of the Past, Eh?”, piracy distorts the markets and prevents businesses relying on traditional copyright models from properly evaluating their viability.

Fourthly, Patry’s proposals are based on the assumption that today’s laws somehow prevent businesses from adopting “good” business models. They don’t. Everyone is free to relinquish control over the use of their works, and many have done so. Just because someone is prepared to give up control does not mean that the right to control should be taken away from others by force. Just because someone may be willing to pay more in taxes does not mean that everybody else should be taxed more. Even is someone (even a great majority) is prepared to sacrifice their firstborns in the name of some “higher” purpose does not mean that those who do not should be forced to do the same.

These are the big points on which we disagree. Below, I will illustrate this with specific examples from Patry’s book.

Specific Examples

Page

Quote from Patry’s book

My Comments

6

We will never fix our laws unless we clean house and start all over again, this time on a sound, empirical basis: Simply adding on to a failed structure will no longer work... No one should suggest that our copyright laws are rational, deliberate, unified policy instruments, carefully designed to achieve specific social and economic objectives.

Patry is correct here. Today’s copyright laws don’t make any sense and are nothing more than the result of several competing groups of people to carve out some benefits at the expense of each other. This is a recipe for unworkable laws.

10

An international treaty is necessary to make sure all books can be accessible by the blind. Accessibility can be accomplished through a combination of compulsory licenses and exceptions. Voluntary agreements among publishers, libraries, and blind groups are certainly necessary to the ultimate success, but a global, binding instrument is required to solve cross-border issues and to ensure minimum standards are met.

Why not have international treaties that would provide for compulsory donations of cars to those with arthritis? While we’re at it, why not have international treaties that would compel luxury restaurants to feed the hungry? If publishers do not want to make their works available to the blind, what right do we have to force them?

11

My view is that copyright laws can serve valuable purposes: while they do not cause people to create in the first place and do not create economic or critical success, they do ensure that once works are created, those who wish to protect them and economically benefit can. We all should support this goal.

Duh. Unfortunately, the rest of the book does not support this benevolence towards those “who wish to protect” their works from being used without authorization.

12

...markets are still badly underserved by many copyright owners who cling to the ideology of property rights: “it’s mine and I can say no if I want to.” That attitude inhibits innovative services capable of putting the type of money in authors’ pockets that they deserve. You can’t eat ideology.

You don’t make people happy by force. It is theirs, and they are entitled to say no if they want to, even if they choose to go hungry. Just because we can think of better business models does not mean that we should force them upon those who disagree.

16

The argument is that the protection against free riding that copyright provides also causes distributors to bring an abundance of works to market. In this argument, copyright is essential for abundance. The argument misapprehends markets and the role of law in markets. Historically, in mainstream culture, copyright law has been the legal device used by a few gatekeepers to control a winner-take-all marketplace of artificial scarcity, in which far fewer works are made available to the public than are created.

Today, there are thousands of ways copyright owners can make their own works available to the public without the need to go through gatekeepers. According to YouTube, one hour of video is uploaded to YouTube every second. Even if 15% of that video constitutes original works not owned by somebody else, it is still very impressive. Just because the public is more interested in specific works that their owners do not wish to make available for free does not mean that there is no abundance. However, it also does not mean that those who do not want to contribute to the abundance should be forced to do it.

17

This doesn’t mean we have to rely entirely on government subsidies – the marketplace is fine for works by corporations and by the popular authors they support – but it does mean we need to find non-market ways for other authors and artists to obtain the necessary initial conditions to create. Aside from government subsidies and tax breaks, one way to encourage more and diverse authors and artists is to ensure that online platforms exist where creators can post their works in order to gain an audience, run advertisements against their works if they choose, or charge for downloads, streams, or other uses if choose. Such platforms are free to individuals and provide a way to avoid the gatekeeper lock on success.

I am wholeheartedly against government support of the art. If people don’t want to voluntarily support an artist on conditions that the artist would like to be supported, then the government should play no role in forcing the public to pay for the cause they do not support. As for the platforms, the argument is moot in the sense that such platforms already exist. If Patry is trying to make the argument that the government should force everyone to use such platforms, then again, the government should not force copyright owners to use one or the other model for distribution of their works.

27

If we want more authors and artists, we must provide them with the economic ability to be authors and artists, above the fray for market share in a winner-take-all environment. It is not copyright for copyright’s sake that matters to authors and artists, but rather a steady income.

Whether the right to control the use of the works matters to artists may or may not be true. It is also irrelevant. What matters is that we should not force the authors to give up the right of control if they don’t want to, even if doing so would bring about a more steady income. Likewise, we should not subsidise authors whose works do not attract enough voluntary funding. We certainly do not want more authors and artists who take their steady income for granted regardless of their ability to convince enough people of the quality of their works.

35

These corporations continually press for more draconian copyright laws (e.g., cutting off Internet access, harsh criminal penalties) while arguing for more relaxed antitrust laws. They bring lawsuits against consumer electronics companies and against online platforms offering authors and performers a way around gatekeeper obstacles.

And these corporations are in their right to do it. The purpose of modern antitrust laws is to destroy the successful for being successful and to support the impotent for being impotent. There is nothing wrong with monopolies if their monopolistic status is based on their ability to offer a product that everybody wants to buy. There is everything wrong with monopolies whose monopolistic status is based on the use of violence or on government restricting competition through licensing, certification and so on. Copyright is as natural a monopoly as it gets. Having a monopoly over a certain book does not create a monopoly over books as a class. Just because an author refuses to provide his book to the public on conditions he disagrees with does not deprive the public of the right to read other books. No one is entitled to something that would not have existed but for another person’s efforts.

36

Giuseppe Verdi began his composing career before Italian copyright laws were passed. Although he and his publisher had previously developed work-arounds, after Italian laws were passed, Verdi was able to amass a considerable fortune. One effect of this success should be noted, however: Verdi made so much money he stopped composing. Johannes Brahms also made considerable sums as a result of the passage of copyright laws that enabled his publisher to prevent free-riding, and as a result retired early.

Patry is full of indignation towards Verdi and Brahms for they decided that they could afford to retire early. Of course, collectivist mentality suggests that they should have been enslaved to produce even more great works until the day they died. It goes back to the very simple question – “Should authors be allowed to exist for their own sake?” Or should they, in the words of Bernard Shaw, “justify their existence” … by showing that they are “pulling their weight in the social boat”?

38

Copyright was an author’s right only in the sense of selling those rights on the cheap to booksellers: the great copyright dispute in England in the eighteenth century over whether copyright was a perpetual right was for good reason called the Battle of the Booksellers, and not the Battle of the Authors.

That may be true, but this argument is based on the selective reference to pre-existing laws. If we are discussing what the laws should be, regardless of what they are, there is no reason why we should pay much attention to what the laws had been when they were first introduced. That in the eighteenth century England authors were treated as slaves does not mean that we should be doing the same in the twenty-first century.

39

An important error made by policymakers in grasping the role of copyright in the world of digital abundance is the failure to appreciate that the underlying issue is pricing, not technology. Technology creates new consumer expectations about markets; those expectations can either be met – in which case copyright owners will make money according to those new markets and new expectations – or, as is often the case now, copyright owners can refuse to meet the new expectations, in which case consumers will go elsewhere to have their needs satisfied by others.

Unfortunately, this is not the dilemma as it exists today. Copyright owners would be happy if consumers whose expectations they refused to meet would “go elsewhere to have their needs satisfied by others”. What happens in practice and what copyright owners try to combat is that consumers instead of going elsewhere take from copyright owners what copyright owners are not willing to give. We cannot speak of digital abundance if the abundance exists at the expense of producers whose works are being pirated.

39

As Ludwig von Mises pointed out, “producers do not produce tor their own consumption but for the market.” Content is not king, consumers are: “The real bosses … are the consumers. They, by their buying and by their abstention from buying, … determine what should be produced and in what quantity and quality.”

It is always a pleasure to see famed libertarians quoted by someone who openly calls himself a “left-wing guy”. The purpose, of course, is to be perceived as someone balanced and objective. Consumers are not king in one very important aspect. While they can dictate what should be produced and in what quantity and quality, no collective desire of consumers can result in the creation of a specific work. It still takes a creator to produce the product. In this sense content will always be king. Whether that content is going to be welcomed by the consumers and generate income for the creator is a separate issue.

41

Unfortunately, through mistaken interpretations of the noun “copy,” the reproduction right has been wildly expanded in many countries, particularly the United States, to include transitory acts such as buffering, caching, or non-consumable versions that are necessitated by the automatic operation of computers or other digital technologies. None of these transitory acts has an independent economic value; that is, they do not harm copyright owners’ markets.

And the only reason this happened was because of resistance of lobbies supporting free and unrestricted unauthorized use of works on the Internet. The only way to deal with such resistance was to use existing laws to combat emerging problems. It took many years before the “making available” right was recognized as a separate right. It is still not recognized as a separate right in Canada in 2012. The only way to prevent unauthorized streaming and downloading was (and in many countries still is) through reproduction right, which happens to cover transitory acts as well. Had ISPs were more cooperative with the copyright owners at the dawn of the Internet in at least the most outrageous of examples, today’s business models would have been a lot more reasonable.

43

In an effort to create scarcity in the digital environment, copyright owners have obtained rights that give them the power to regulate technologies developed by third parties and to control access to their works. Neither of these rights previously existed. Previously, the copyright laws were technology neutral: They did not regulate technologies, but rather they regulated uses of copyrighted material, regardless of the technology employed.

And nothing has changed. Copyright has always been (and rightfully so) about control and access. There have been thousands of license agreements where one licensee would receive a license to reproduce songs on vinyl, while another licensee would receive a license to reproduce the same songs on tape. Copyright owners have always had the right to determine on which media their works are to be used by whom, and there is absolutely nothing wrong with it.

47

A new structure must provide twenty-first-century solutions to getting authors paid and giving the public access to their creations. This will involve in many (but certainly not all) cases changing the fundamental nature of copyright from a grant of exclusive rights into a right of remuneration: a right to be paid through statutory licensing, collective management of rights, and levies. Having an exclusive right does you no good if you can’t get paid.

Welcome to Soviet Union, comrade Patry. This is exactly the framework that existed in the Soviet Civil Code of 1964. According to s. 479 of this pinnacle of legal socialist thought, an author had the right (a) to publish, reproduce and distribute his work in any manner permitted by law under his name, pseudonym or anonymously; (b) to enforce integrity of his work and (c) to receive remuneration for the use of his work by third parties, unless otherwise prescribed by the law. The amount of remuneration was to be prescribed by the Government. On top of that, all potential licensees in the Soviet union were state-owned. And if that was not enough, the government always had a right to get a compulsory license for the use of any work.Authors should not get paid unless someone is voluntarily willing to pay to use their works. Likewise, consumers should not be entitled to use other people’s works unless they agree to such use. Having an exclusive right does you good if you value that right, and many authors do, regardless of whether they get paid to give it away or not.

59

Copyright laws have, in practice, functioned as a way for government officials to placate authors, artists, and performers with the promise of monetary rewards, while throwing them on the mercy of the free market.

Oh, what contempt for free market! Free market is nothing but an indicator of willingness of consumers to obtain goods or services on certain conditions. If nobody wants to buy a certain book at a certain price, no copyright will (or should) help the author. All copyright does, like any property right or any other individual right, is it provides a framework of equal opportunities to present a product to the market. Today, when there is almost an indefinite number of ways to make one’s works available to the world, authors are free as never before to pursue success by selling directly to the public. Being able to lay a claim on their product is crucial in that pursuit.

59

Since Mr. Burnham could not challenge any of the empirical conclusions in the Gowers report, he instead relied on a previously unarticulated and undefined “moral case at the heart of copyright law.” We are truly at sea if our laws are to be enacted according to a moral case espoused in the face of unchallenged economic evidence refuting the minister’s brief.

And this is really at the heart of the problem that Patry does not see the moral case of copyright law. It has nothing to do with economic evidence, it has nothing to do with fair remuneration, it has nothing to do with technological measures. The only thing that matters is whether we want to treat authors as chattel existing for the benefit of the society, or as free people who have the right to exist for their own sake.

67

Within a given economy, the piracy of domestic goods is a transfer of income, not a loss. Money saved by consumers or businesses on CDs, DVDs, or software will not disappear, but rather be spent on other things – housing, food, or other entertainment, or other business expenses, and so on. These expenditures, in turn will generate tax revenue, new jobs, infrastructural investments, and the range of other goods that are typically in the loss column of industry analyses.

Using the same logic, if I rob a bank and spend all the money I stole in mom-and-pop stores in my neighbourhood, there is no loss. These expenditures will generate tax revenue, new jobs, infrastructural elements, and the range of other goods… No wonder socialists love redistribution of wealth. One of the slogans of the Russian socialist revolution “Steal the Stolen” was used to justify murders and “expropriation” of property from the rich.

69

Even if record labels make less money from the increase in sales of digital singles than they did from the peak year of CD sales (an unfair comparison in any event), the difference is a positive social benefit: Consumers are now able to spend money on what they do want and not on what they don’t. Record labels may have less money but we have more, and that’s a great thing for us and for society.

That’s what I mean when I say that I respect comrade Patry for his honesty. Indeed, isn’t this a great thing that someone who creates something has less money, while those who steal it from him have more money? Great equation!

75

Laws are effective only if they do what we want them to. What do we want copyright laws to do? The most popular things policymakers say copyright laws should do are (1) provide incentives for authors to create works they would not create in the absence of that incentive; (2) provide the public with access to those works; and (3) provide respect, via non-economic rights, for those who create cultural works.

Patry makes a valid point here, and this is a big problem with most supporters of stronger copyright laws. These three objectives on the surface seem like good reasons for having copyright laws, but as Patry brilliantly does in his book, they turn out to be shallow, because indeed, copyright does not provide true incentives for creativity, it does not enhance access to the works and it seldom generates much respect for creators through non-economic rights. The only valid reason for existence of copyright laws, in my opinion, is the extension of something we are all taught as children: “don’t take what is not yours, ask!” It is natural for authors, if we regard them as free individuals, and not slaves, to have the right to decide how to dispose of the results of their work. Because they cannot put a physical lock on their works and have armed guards protect it, they need to have a valid cause of action to go after those who choose to circumvent the market rules and obtain the benefit of using the works without giving the author what the author is selling the right to use his works for. Whether or not protection of authors benefits the society is utterly irrelevant. An argument can easily be made (and is being made more and more vocally today) that copyright actually hurts the society as a whole. So what! If we enslaved 30% of the world population and had them work for us for free, our society would have benefited even more. Imagine the world we could enjoy with all this free labour!

76

…granting rights to one group of authors places them at odds with later authors who want to build on their predecessors’ works to create new works; granting exclusive rights to copyright owners gives them the ability to protect their investment, but it also gives them the ability to charge monopoly prices and restrict access; granting authors the right to prevent uses for non-economic reasons protects reputational interests but also gives them the ability to suppress satirical works or uses that are socially beneficial but of which the author does not approve.

My answer to that is, again,– so what! Having the ability to charge monopoly prices for a particular work does not guarantee (as Patry himself argues in the same book) commercial success. If nobody wants to pay the monopoly price, the copyright owner either lowers the price or fails. No one is entitled to use the work at a price that the seller is not prepared to sell it for.

Likewise, no one is entitled to build on their predecessor’ works to create new works if those predecessors actively oppose such use (I will deal with the issue of orphaned works below).

True criticism is one of the very few legitimate reasons to allow unauthorized use of the very minimum of someone else’s works to make the point. Creating parodies and satirical works usually goes well beyond this requirement. As I wrote in my work on comparative copyright laws on parodies, Weird Al Yankovic sold 25 gold and platinum parody albums, but never had an urge to create unauthorized parodies! It is certainly possible to obtain permission to create parodies, and if the author of the original protests, don’t do it! Plain and simple.

78

There is no substitute for the hard work of figuring out the complexities of creativity, including the very different markets for different types of works and the different cultural approaches taken around the world. It is not enough to say the free market will figure it out so we don’t have to.

The Soviet administrative system has, of course, done a much better job of figuring out how many poems and cantatas proletarians required in each specific 5-year plan.

80

Whether intentionally or not, this legalistic approach to the nature of creativity results in outsourcing our cultural heritage to the private sector.

Excuse me? Outsourcing the heritage to the private sector? Wasn’t it the private sector that created the heritage? To say we are outsourcing something to the private sector implies that those doing the outsourcing are not in the private sector. I know that Mr. Patry declares consistently that his views are not those of Google, but is this an indication that he sees himself as part of the new world government machine?

80

I shall now explore why copyright laws have principally helped superstars and distributors. The point of this inquiry is not to argue for the abolition of copyright – something I disfavor – but rather to help create an evidence-based approach to how our copyright laws can work better in practice. Our copyright laws are, and have always been, a winner-take-all system. If that is the desired policy, then our copyright laws are working fine. If, however, the policy is to create diverse works by diverse members of our society in order to create a rich cultural heritage, then it is important to realize copyright laws never have accomplished that purpose.

Here is a very simple answer why copyright laws tend to help superstars: people like to buy the stuff that superstars produce, that’s why they are called superstars. There is no value in subsidising artists that nobody wants to listen to, whether or not this creates diverse works by diverse members of our society or not. Diverse members of our society have a million ways to deliver their works to the public. Just because they cannot find an audience willing to pay for their works does not mean that there is something wrong with copyright.

89

The hostility of gatekeepers to platforms like YouTube steins not from the existence of some unauthorized content on them, but rather from such platforms direct challenge to the superstar system.

The gatekeepers have never been hostile to platforms like YouTube as such. They have been (and rightly so) hostile to unauthorized use of their property via such platforms. Big difference there.

90

If policymakers truly want to increase creativity, then they must greatly liberalize the ability of one person to transformatively copy from another.

Even if unauthorized copying indeed results in increased creativity, as I explained above, increasing creativity is not a true purpose of copyright laws.

94

Here are some examples of the importance of copying (whether of copyrighted works or not). Children and adults who wish to learn how to play a musical instrument must do so by listening to the sounds their teachers make and then trying to replicate those sounds as closely as possible. Many times you play the same passage in unison so that you can keep your teacher’s sound stored in your brain along with yours. Tricky rhythms can only be learned by listening to others and by copying their playing. For most musicians, this process of copying continues throughout their lives, as you seek out new sounds you want to copy.

And most of these instances of copying are not being restricted by existing copyright laws. Moreover, the right of a master to prevent transformative copying of his works by others does not necessarily mean that all of them will exercise such right. Just ask!

99

It has been estimated that by the middle of the sixteenth century, most masses were parody masses. Parody masses did not make fun of the original, but were instead designed to show respect for and appreciation of the original music while simultaneously showing off the second composer’s own skills.

And what does this prove? That in a feudal society 150 years before the first real copyright act it was OK for some to create parody masses? Is this the standard we are now striving for?

102

JAY-Z: No, I was actually honored that, you know, someone took the time to mash those records up with Beatles records. I was honored to be on, you know, quote-unquote the same song with the Beatles.

And how do we call the situation when one party to an intimate act feels honored to engage in it, while the other party protests? Again, nothing prevents owners of original content to say yes if someone wants to use it – for transformative purposes or not.

103

HISTORY SHOWS COPYRIGHT PROTECTION HAS BEEN RELATIVELY UNIMPORTANT FOR MOST AUTHORS

History shows that the world average life expectancy is 67.2 years. Let’s kill everyone who surpasses that age! Just because most authors don’t care to protect their works does not mean that we should disregard the rights of those who do care.

105

…for the vast majority of copyright owners, twenty-eight years is a sufficient period of protection.

For the vast majority of people, owning one car and a bank account of $100,000 is sufficient. Let’s expropriate the excess from everybody who has more than that! Oh, and by the way, most people don’t need a Buffet R-13 clarinet, either.

106

The fact that copyright is valuable for only a few doesn’t mean we should abandon copyright. But the fact that copyright has been of limited utility for most people does mean we cannot have wildly expansive laws that benefit the few at the expense of the many.

Why not? Copyright laws only benefit those for whose benefit they are created. Society should not be a part of that equation other than in the context of abstaining from violating the rights of copyright owners.

113

The data is from Warner’s own SEC filings. To sum up, since 2005, Warner Music Group lost $429 million while these two executives alone made $83.8 million. The year 2005 is important as a milestone because the company was taken public in that year, but right before it was made public, the investors, which included Mr. Bronfman, were paid back all of their investment. Rather than being a way to raise money to invest in the company’s development and future, the IPO served merely as a cash-out for the original investors, with no new money being put into the company. In 2010, the stock declined by 2.9 percent but Mr. Cohen received a 30 percent increase in compensation, to $6.5 million.

What greedy bastards! Let’s crucify them as well. What does this have to do with copyright? What purpose other than to ride on the wave of public envy of the rich does this paragraph pursue? If there was shareholder fraud, let shareholders and investors take care of that. If not…

124

If it is true that the UK creative industries outperform all other European countries and are at the center of the UK economy …, why would those industries need government help, and why would they need even stronger laws since there is no correlation between stronger copyright laws and better economic performance.

Copyright owners are not begging for favours from the government, they are demanding the government to help them enforce their right to control what they create or invest in. Just because historically copyright laws have been in the form of government grants, does not mean that we should keep pretending that the government creates rights out of the blue. All the government does is protects the ability of creators to enforce the natural monopoly on the results of their creative activities.

127

The point is that the need to have some level of protection cannot support current claims that we need a very high and ever-increasing level of protection. Those levels have nothing to do with furthering creativity, and we should be honest about that.

Again, Patry is correct here. We should be honest about it and abandon the reasoning that we protect creators’ right to control their works because it furthers creativity. We do it because taking by force something that isn’t ours is wrong.

128

If we want more creative works and more knowledgeable citizens, we will have to disassociate these goals from commodity markets, and focus on why people create and learn. We must then be willing to commit public monies to their encouragement where market forces have proved inadequate to the task. While there are many wonderful educational products available from the private sector…

No, thank you. I don’t want the government to use my money to encourage creativity that does not benefit me, otherwise I would be encouraging it by paying for the use of the results of such creativity. And again, why such contempt for the private sector?

139

Despite all the flaws in the balance metaphor, at least it is premised on the existence of competing, valid interests. For this reason, it has fallen out of favor with those who wish to exercise total control over all uses, regardless of how trivial, and regardless of the lack of any economic harm from those uses. The property metaphor is the chosen vehicle for this agenda. There is, after all, no need to balance others’ interests if you have an absolute right in your property.

And this is the proper way to deal with what copyright is all about. Just as a farmer has an absolute right to decide what to do with the steak he makes from his cow, an author has an absolute right to decide what to do with a book he writes.

140

By contrast, when a government is bestowing a privilege rather than enforcing a property right, the onus of establishing entitlement to the privilege is on the person seeking it. Copyright is a privilege granted by governments on everyone’s behalf.

While historically copyright was established as a privilege granted by the Queen to booksellers, remember we agreed to rewrite copyright law the way it should be, not the way it is or had been. In a situation when free people have a limited government that doesn’t force the citizens into submission from cradle to grave, governments do not create rights and privileges, they do not exist to make everyone feel good about themselves, the only purpose of the governments is to protect individuals from their rights being violated by others. The only time it is appropriate to speak of copyright as a “privilege bestowed by the governments” is when you are talking about a society of masters and slaves.

141

While copyright owners like to portray this as a legal problem – a problem of piracy – the problem is a market problem, arising from the continual failure of copyright owners to respond and adapt to changing markets and the technologies that drive consumer demand.

Compare this to: “While women like to portray this as a legal problem – a problem of rape – the problem is a relationships problem, arising from the continual failure of rape victims to respond and adapt to desires of rapists that drive the demand for carnal relations.” Markets may change, demand may change, but those who fail to follow the hints of the market should not have their rights taken away from them – we should simply let them eat the consequences of the market.

142

“…The [lawful] content market… is simply failing to meet consumer demand.” Denying consumers what they want cannot succeed as a business model, and no law can save copyright owners who refuse to satisfy consumer demand. The problem is as old as it is ignored.

Compare this to: “The contingent of consenting women is simply failing to meet consumer demand. Denying men what they want cannot succeed as a business model, and no law can save women who refuse rapists’ demands. The problem is as old as it is ignored” I warned you, I love this metaphor…

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In the unhealthy model, copyright owners don’t respond to consumer demand; acting like ostriches, they expect that their refusal to fulfill the market demand means that no one else will. They are shocked, shocked, shocked! when unauthorized supply sources crop up. They then insist that the courts and legislatures protect them from their own failure to understand the basics of how supply and demand works. When they ultimately see they cannot kill off the new technology, they grudgingly accept it, change their business models, and then profit from it.

A sure way to become popular these days is to make the following statement, “In the unhealthy model, women don’t respond to men’s demands, acting like ostriches, they expect that their refusal to fulfill men’s demands means that they wouldn’t be forced into it. They are shocked, shocked, shocked! when they get raped. They then insist that the courts and legislatures protect them from their own failure to understand the basics of how supply and demand works. When they ultimately see that they actually enjoy the process, they sometimes marry their rapists, and then profit from it.” Can we imagine for a minute that there may be people who actually value their right to make decisions for themselves, even if somebody else can come up with other ideas? That’s the eternal problem with collectivists who believe that they know everything better than the little people who always seem to stand in their way.

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Cold, economic facts of life cannot be changed by laws. Laws cannot make advertisers place ads where they don’t want to and laws cannot create audience share.

Talk about strawmen… I am not aware of a single person who has ever advocated for any such laws. Whether copyright owners are capable of generating sustainable revenues is not the issue; whether they can defend their right to decide how their property is used, is.

157

You Can Compete with “Free”

Here Patry knowingly diffuses three instances of “free” – (1) when copyright owners allow the use of their works for free; (2) when others make their own, other, works available for free; and (3) when someone is making works owned by somebody else available to the public for free and against the wish of the copyright owners. There is nothing wrong about Metallica competing with a noname band uploading its own music to YouTube. There is nothing wrong with Soundgarden making its new song available for free through iTunes. There is everything wrong with others “sharing” something that is not theirs.

160

The Hulu, and BitTorrent data show that contrary to received wisdom, the solution is not more laws, but more authorized content, at correct pricing, and in forms that are the most useful and convenient to consumers. Copyright owners will never be able to eliminate piracy, but they can effectively compete with it and make good profits with correct pricing and convenience.

Feel free to build upon the rape metaphor. I only have one question to ask Mr. Patry – “good profits and correct pricing” in whose opinion?

163

Under the Mt. Sinai approach, copyright = control = money. Law is therefore the necessary first step in this control equation; the coercive power provided by law is, for too many in the copyright industries, not external to their businesses, it is their business model.

Another half-truth here. Copyright is about control, but control is not always about money. If we allow copyright owners to exercise all the control that they are looking for, one of the two things will happen: if they are happy with the results that it brings, it will be the end of the discussion; and if they are not happy, it is very likely that they will voluntarily switch to the new models that will be more efficient. This is the attitude of socialists that was best addressed by Frederic Bastiat back in 1850 when he wrote in The Law: “Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all. We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.”

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The belief that legislatures can force the public to obey copyright laws the public disagrees with is a fundamental error. Such laws are not just ineffective; copyright owners mistakenly on them as a substitute for responding to market demand.

Laws against murder do not stop murderers from murdering people. Granted, copyright infringement is a massively more popular violation of individual rights, which is not surprising, given open calls to legalize unauthorized use of something that belongs to somebody else under the false pretence that it benefits the “society as a whole”.

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Only good business models, and never law, are the solution to bad business models. There is only one way to get people to obey copyright laws, and that is to have copyright laws that support good business models.

This is a direct contradiction. In the first sentence Patry correctly states that the law is not the solution to bad business models. In the sentence that follows he advocates for the adoption of laws that would force copyright owners to adopt whatever it is that Patry considers “good” business models. So it’s OK to have the law back up one model, but not the other model, even though the law is never the solution?

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At the same time, calls for abolishing copyright laws ignore that there is a need to prevent unauthorized, non-socially useful conduct that is individually beneficial to members of the public in the short term (in the sense of not paying), but which is harmful to society in the long term (by killing the goose that lays the golden eggs).

This, ladies and gentlemen, is the true road to serfdom so skilfully referred to by comrade Patry in his book. His only concern is to have copyright laws give as little to the creators as possible to ensure that they continue to lay golden eggs to benefit the society in the long run. Collectivism always starts with great ideas about creating the greatest benefit for the greatest number of people at the expense of the least misery for the least number of people. It always ends with people being killed to ensure that the higher goal is attained.

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Laws that are out of step with the needs of society must be changed. When we don’t change them – as we have not with our copyright laws – there is massive disobedience. Characterizing wide segments of the populations as thieves and criminals is a sure sign a system of laws has failed.

No, it is a sure sign that we have become a society of people who feel entitled to use others as slaves – whether it is through progressive taxation or through unauthorized use of intellectual property.

177

The central element in copyright ideology is exclusivity. Copyright owners are said to be granted “exclusive rights,” the essence of which is the ability to exclude, to be able to say no to anyone who wants to use your work, the ability to say no for a good reason, for a bad reason, or for no reason; the ability to attempt to command any price you want; the ability to impose any conditions you wish on the use of your work; and in many countries, the ability to withdraw the work from circulation.

This is correct, and yes, this is the only thing that copyright laws are supposed to protect. They are not supposed to ensure wealth or popularity. They are merely a tool to allow creators and subsequent copyright owners to offer an intangible product to the market.

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If I own my car, I will be protected in that ownership against theft, but the State can still tell me what speeds to drive, to wear a seatbelt, to have insurance, and to register the car with the motor vehicle department and pay fees for that registration.

And you know what? There are many people who believe that speed limits, the seat belt requirements, mandatory insurance and vehicle registration are nothing more than unlawful usurpation of power by the government.

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Regrettably, currently both authors and the public are ill served by our current laws: authors go unpaid for many legally compensable uses, while many uses that should not be compensated for are the subject of claims by copyright owners. What are the reasons for this unhappy state of affairs?

In the case of uncompensated uses where income should flow to authors, there are two reasons why things have broken down. The first reason is the sheer volume of unauthorized activity made possible by digital formats. There is no effective way to control most of this activity, so the solution is to figure out how to compensate for it. Doing so entails giving up the ideology of copyright = control = money.

Welcome to Soviet copyright law, comrades! Let us have the government figure out how to compensate authors for unauthorized use of their works through digital formats. The government is so efficient, everything is going to be great. Keep walking, nothing to see here…

179

Insisting on control, insisting on the ability to always say no, insisting that “it’s my property and everyone who uses my work without my permission is a thief,” may make one feel self-righteous, but it won’t pay the bills. A right of remuneration, not the ability to say no to things you can’t control anyway, must be the new focus.

Says who? If the author is willing to compromise his ability to pay the bills in favour of being able to control the use of his works, who are we to thwart it? And if the author wants to get paid when the public is not willing to pay for the use of his works, who are we to use taxpayers’ money to fund it?

184

The music industry family is fatally dysfunctional; policymakers have to step in and lead. Leading means making decisions that some people or even many people don’t like, but which are necessary for the good of all.

This principle is usually called “mob rule”. May I ask, who comrade Patry proposes to form the politburo of policymakers to teach the dysfunctional music industry midgets how to run their shabby establishments? This darn private sector again. Let’s have a global state-run recording corporation! Then we can all hope for cantatas about Karl Marx in Dolby Digital.

188

Yet, the Commission proposes to prevent these goals from ever being accomplished by adding, “such solutions should preserve the contractual treedom of right holders. Right holders would not be obliged to license for all European territories, but would remain free to restrict their licenses to certain territories and to contractually set the level of license fees.”

The indignation is clear here. What contractual freedom? For these little people in the private sector? Our macroeconomists will be able to set the fair remuneration for each kind of use and these pesky copyright owners should sit down and shut up. That makes sense…

197

How Long Should Copyright Last?So how long is long enough? If one approaches the question ideologically, the only answers are ideological and as such can never provide a satisfactory answer to those who do not share the ideology.

I argue that because copyright is property, the protection should be perpetual as long as the owner takes steps to inform others of his intentions to protect it. I will deal with the requirement for formalities below.

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The argument is that the author will calculate in 2011 that a copyright that lasts until 2101 is not a sufficient incentive to create, and that only if copyright lasts until 2121 will he or she create in 2011. No one should believe that.

And no one does. The term of protection (just as the protection itself) is not about incentivising creativity, it’s about recognizing the right of the creator to deal with the results of their work as they please.

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The way to resolve this problem is through mandatory use of formalities that require copyright owners to take steps to affirm their continued desire to claim their rights, principally the requirement that the copyright owner file a document with a government agency expressing a continued interest in the work.

And this is the only Patry’s proposal with which I wholeheartedly agree. There are indeed millions of works that their owners don’t care to protect or capitalize on. If the creators expect the courts to enforce their rights against all kinds of unauthorized uses, it is only fair to ensure that the creators value these rights sufficiently to demonstrate interest in their protection not only when they managed to catch some deep pockets using their works without permission. This is especially true if the potential term of protection will be perpetual.

212

Quoting Judge Leval: “ Fair use should not be considered a bizarre, occasionally tolerated departure from the grand conception of the copyright monopoly. To the contrary, it is a necessary part of the overall design.”

Fair use is indeed a necessary part of the overall design, but only as a limited departure from the grand conception of the copyright monopoly. This is why it’s about exceptions from the general rule that no one should use protected works without permission. There is nothing wrong with fair use as long as it is limited to cases when the use is indeed fair. And no, this does not include any unauthorized use just because it is transformative.

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Straitjackets consist of narrow lists (such as those contained in the EU’s Information Society Directive), drawn up by government officials, of the few types of unlicensed creativity that are permitted. The idea that government officials can effectively formulate and execute a creativity centralized command system in which all permitted uses can be carefully spelled out in advance is to believe that the Soviet-planned economies were a rousing success.

So suddenly now Mr. Patry is not a fan of Soviet-planned economies? How about trying to rewrite the whole copyright system based on some policymaker’s understanding of what a good business model is?The great advantage of European approach to exceptions from copyright is predictability. The great advantage of the fair use doctrine is flexibility. The greatest disadvantage of fair dealing doctrine in Canada is that it provides neither predictability nor flexibility. As long as the judiciary’s understanding of the underlying reasons for copyright’s existence is clear (whether it exists to protect the authors or to benefit the public), I would suggest that fair use is a better approach. When no such clear understanding exists, fair use becomes a tool in the hands of activist judges – whichever way they are leaning.

221

There is, however, a very sharp divide between the flexibility found in the United States and the top-down straitjacket imposed by European Union directives. That divide greatly inhibits creativity and innovation in the EU and therefore U.S. companies a distinct advantage.

Excuse me, didn’t you just write that there is no correlation between stronger copyright laws and better economic performance? Intellectual property laws are important but is there maybe some other factors that give U.S. companies a market advantage?

223

Closed lists must be regularly updated on the penalty of crushing technological or market innovations: no legislature, no matter how careful or insightful, can think of all current uses, much less think of uses, technologies, or markets that are not yet existence. In the past, technologies and therefore business models changed slowly. This is no longer the case.

You can’t have it both ways. On the one hand, it is true that one cannot expect the legislatures to think of all of possible uses. On the other hand, this is what Patry is advocating when he suggests that different sorts of works should have different terms of protection, carefully designed to reflect the best interests of the society in having access to such works.

227

Copyright laws are not an end in themselves, but rather a means to socially desirable behavior. Focusing on behavior rather than on who has a right or an entitlement will go a long way toward making our copyright laws effective. Adopting dynamic, flexible legal principles that can quickly respond to changes in behavior, rather than waiting for governments to legislate permitted innovation is critical.

Cannot it be both? Laws against theft are a means to socially desirable behaviour, yet they are based on who has a right. You cannot sculpt social behaviour or have flexible legal principles unless it is based on some underlying reason.

228

By phrasing the discussion as one in which the “private” rights of authors are deemed the default rule, the public’s interest is cast as an unnatural and unwelcome “limit” on or “exception” to the desired natural state of affairs. Copyright owners are alleged to have unfettered rights in their works, even if by copyright owners we mean large, multinational corporations who have bought rights, on the cheap, from the actual creators.

Let us not forget, the public would not have access to the works, unless such works are created by the authors. This is not to bolster the argument that copyright laws increase creativity. This is to say that after the works have been created, there is no reason why anybody should expect to be entitled to use them without the author’s consent.

228

Copyright is not and has never been a property right. Copyright laws are regulations created by governments to further broad societal goals. Those goals are pragmatic, not ideological, and as pragmatic, they accord certain privileges given to copyright owners, and certain privileges given to the public. There is no basis to regard any privilege as more important than another because they all work toward the common good.

Again, if we are discussing what copyright should be, it is irrelevant what it is or has been. Regardless of what it is or has been, copyright should be a property right, because it protects something that does not exist but for the work of a creative mind. Just like there is property in items created by one’s own labour, there is property in items created by one’s creativity.

229

We must accept that no one has rights, but that everyone has obligations, to each other, and to the common good.

The end justifies the means, right? To each according to his needs, from each according to his abilities…

229

Sometimes that means giving one set of authors the right to stop other authors from doing unauthorized acts with copyrighted works. Sometimes that means giving the latter group of authors the right to do things with copyrighted works without permission or payment to the first set of authors. When this latter event occurs, it is not through a limitation or exception, it is instead through the ordinary operation of copyright law acting in the public’s interest. Authors – all of them – do not stand in opposition to the public interest, but solidly within it. “Limitations and exceptions” insultingly and inaccurately suggest they don’t.

A general transformative use exception was also a part of the Soviet copyright law – and with the same excuse: to ensure the most benefits to the “society”. Transformative works are important for our culture, but they should not be necessarily unauthorized. Just because I can take good photographs, does not mean I would be justified in stealing a camera.

238

In an irresponsible delegation of power, governments throughout the world have vested in large, multinational media companies and their trade associations, the ability to determine when and how new services may be offered to the public, including the features contained in consumer electronic goods. This delegation occurs through legislation that makes it a civil offense and a crime to circumvent digital locks that companies create without any governmental supervision. It is as if the police were paid from the tickets they hand out and got to make up the rules for when violations of law occur.

Delegation of power? You cannot delegate that what you do not have. Since when do the governments have the right “to determine when and how new services may be offered to the public, including the features contained in consumer electronic goods”? Government supervision in protecting something that’s yours? Talk about Soviet-planned economies and contempt for the private sector!

258

Pirate CDs were, however, priced closer to the comparative cost of living, but still not equivalent. Where an Indian consumer was presented with the choice of buying the CD at the equivalent of US$385 (CPP) for the authorized copy, or US$54 for the unauthorized CD, the choice was clear.

Yet you can compete with free? Submitting to a racketeer’s demands who offers protection for a payoff can also be called a business model, but is it really? It is clear that if it is equally convenient and safe to buy a CD at a fraction of the price at which it is being legitimately offered, most people would go with the cheaper option. To make sales of pirate CDs unsafe and inconvenient is the purpose of copyright laws.

259

As then-President Lula da Silva observed, “For the right to use one copy of Office plus Windows for one year or a year and a half, until the next upgrade, we have to till the earth, plant, harvest, and export to international markets that much soy. When I explain this to the fanners, they go nuts.”

And that is the core distinction between IP-heavy industries of the developed countries and labour-intensive industries of the developing countries. Added value is not created by hard work alone. Unlike what Karl Marx would have you believe, there is no inherent value of labour. It only costs as much as someone is voluntarily willing to pay for it. If you are a hard worker and no one is willing to pay you, the value of your labour is zero. Many hardworking people would go nuts if they attempted to calculate the amount of hours it would take them to make enough money to buy a fancy clarinet, a luxury car or a mansion. This does not mean that someone’s inability to afford these things, which may be highly desired but not essential, should entitle the “less privileged” to just take what they want. And there is no difference if we are talking about tangible or intangible property.

262

Going after the very small number of those who are doing most of the harm is entirely justified. What is unjustified are heavy-handed techniques against the mass of the population, whether through three-strikes-and-you’re-out approaches, or threats of lawsuits with crippling penalties. Copyright owners have all the tools they need to go after the bad guys, and we should support them in those efforts. However, copyright owners should also support the good guys by providing reasonably priced, convenient authorized goods. If they don’t, no copyright law can help them.

How about the principled approach? Why is it OK to go after a small number of infringers but it is not OK to go after a large number of infringers doing the same thing? While it may be a good business model for copyright owners to support the good guys by providing reasonably priced, convenient authorized goods, they should not be legislated into it. It is their personal decision that we should respect.

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